Nodal Program Update to Cops 05-11-2010 Jim Galvin

Program Status 97% of all QSEs are qualified, remaining non- qualified are working with ERCOT or are new QSEs in 30-day grace period Market Trials have entered Phase 5 (on schedule) with full functionality testing of the following: DAM, RTM and ongoing analysis of LMPs DRUC, HRUC and SASM Settlements functionality including Initial Settlement for DAM, RTM and CRRs Invoices for DAM, RTM and CRRs Data Extracts for DAM, RTM and CRRs

Market Trials Phase 5 full functionality currently running two operating days per week, expect ramping up to 3 days per week and eventually to 5 days per week One week delay in converting to 3-days per week as reported in the market calls on May 7, 2010 Participation remains strong across all market participants Weekly calls are provided for updates on market trial results and Q&A

Market Trials- Highlights CRR- 3 monthly CRR Auctions conducted and invoiced DAM- 9 DAM markets run with DRUC, HRUC and SASM “Guardrails” being relaxed weekly allowing for more robust testing RTM results settled on protocol timeline Settlements- Statements and invoices for DAM and RTM are being posted in accordance with ERCOT settlement timeline Full Extracts available for each settlement run

Market Trials- DAM Issues Bid and Offer submittals cannot handle special characters Higher AS prices have been less frequent, previous high prices for AS were driven by insufficiency of AS bids submitted relative to the obligation to purchase the appropriate MW of AS service Issue with mapping of multiple Load Resources mapped to a single load point item will be resolved soon Overall, prices are coming more in line and participation remains high as testing becomes less constrained

Market Trials- RUC Issues RUC has been over-committing resources ERCOT has not approved RUC commitments that are not operationally sound Some RUC commitments have allowed for entities to test the communication and update of COP process Issues causing over-commitment- $0 Start and $0 Minimum Energy for “Offline” status resources Missing COPs or COPs with incorrect data Shift Factor configuration settings Ratings, impedances and breaker status Commitments have provided the opportunity to demonstrate settlement functionalities

Market Trials- RTM Issues RTM Settlement results will not be fully indicative of expected results Bids and Offers into the DAM may not reflect ERCOT real time Zonal results Resources awarded Energy Offers may appear to have significant Base Point Deviation settlements as results in Zonal market may skew Nodal trial results RT Energy Imbalance references differences between DA positions and RT metered Gen/Load, not like balancing energy settlement in Zonal Testing of settlement functionality is complete and provides excellent experience in Nodal settlement processes

Market Trials- Statements and Invoices Statements and Invoices available through the secured TML with access available to xml version or html version Statement summary view is effective with drill down to more detail capabilities Statements detail settlement values in dollars on statements, no longer billable quantities Statements and invoices are being created and posted in accordance with Settlement Calendar

Market Trials- Extracts Extracts available through secured TML MODE and CODE extracts provided in csv files Extracts have added features with additional columns that have provided much improved information on determinants such as interval count, min, max and totals Previous identifiers in recorders that in zonal were delimited by “underscore” now have their own fields Qty, Amt, Bill QTY and Bill Amt determinants no longer provided, however, no current indications that any charge type cannot be shadowed

Market Trials- Upcoming Items Credit constraints will be added to DAM participation, market participants can test credit constraints, provide desired credit limits to ERCOT for simulation LFC Testing will take place between May 19-21, transitioning resource entities to Nodal control for two hour period LFC Test is financially binding in Zonal, consult PRR 748 for settlement methodology Ramping up to 5x operating days per week with fewer guardrails

Questions?